More than $10 billion wiped from Peloton’s market cap since dismal earnings report

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  • Nearly $10.4 billion has been wiped out of Peloton’s market cap since last Thursday, as investors raise new doubts about the connected fitness company’s future growth prospects.
  • The stock closed down 7.9% on Monday, extending losses from a week earlier.
  • After starting the year with around $45 billion, Peloton has a market cap of about $15.4 billion.

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Nearly $10.4 billion has been wiped out of Peloton’s market cap since last Thursday, amid doubts about the connected fitness company’s future growth prospects.

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The stock closed Monday at $51.25, down 7.9% and extending losses from a week earlier. During trading, the stock set a 52-week low of $49.11.

Monday’s stock move comes after a downgrade by Wall Street research firm Argus that barred its rating from buying.

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In a note to customers, analyst John Stazak said Peloton will face several headwinds next year, as competition from gym chains and other connected fitness companies makes it harder for Peloton to expand its customer base. He added that increased expenditure also raises red flags.

“We expect higher costs as the company invests in marketing and new products,” Stazak wrote. “Furthermore, higher input prices and increased freight costs should weigh on the results.”

Peloton doesn’t expect to be profitable again until fiscal year 2023. The company recently slashed the price of its basic cycle, better known as the bike, by 20%. This has taken a toll on its profits, as it makes less money per sale. Peloton is still recovering from a treadmill recall and has recently ramped up marketing to create awareness for the redesigned tread.

The stock fell 35% on Friday, the same day the company implemented a temporary hiring freeze across all departments. At least 15 analysts lowered their price targets on the stock ahead of the weekend, after Peloton cut its full-year financial outlook.

After its stock soared more than 440% in 2020, Peloton had a market cap of nearly $45 billion to start the year. Now, it’s valued at about $15.4 billion, and shares are down about 66% so far.

—CNBC Michael Bloom

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